Travel Insurance - Under Insured

[dioxide45]

I have a question related to travel insurance. Has anyone ever under-insured themselves intentionally on travel insurance.

We have a cruise and are looking at travel insurance. The actual trip costs are about $2150 per person. I have been looking at different quotes and one I am finding through TravelSafe is about $244 total. If I enter a trip cost of only $1500 pp, I get a quote of about $135. If I go up to in trip cost by $1 pp, the quote goes up about $45. If I go up by $10 for one traveler but stay at $1500 for the other, the trip cost goes up by only about $20. I understand that the travel insurance companies have tiered coverage levels and that makes sense.

After playing around with the trip costs and have found the sweet spot on pricing to be with a trip cost of $1500 pp. Other than perhaps not recouping all travel costs in the event of a claim on trip cancellation, are there any drawbacks to not insuring for the full trip cost? Also, depending on how far in advance on cancels, some or all of the costs are refundable from the cruise line and hotels.

All other coverage are the same regardless of the trip cost (health insurance, evac, travel delay), the only real coverage shortage would be on trip cancellation and interruption.

 

[traveldaddy]

Interesting post - thanks for making me think.

I see you are effectively inserting a deductible into the insurance (being the difference in the actual cost versus covered cost). I think this is a great idea, as I do increase my deductible on car insurance to save money.

In terms of impact, would there be a bit of difference in terms of the trip interruption depending on where you are going??? Some locations may be much more difficult to get out of than others (and therefore costly), I think but am not sure. Like if you had to evacuate because of a hurricane, it would be much different if you were in Florida versus say the Dominican. I don't think that is the best example, but there could be examples where you might want to ensure you have the coverage based on where you are going. I like your idea, as you can get the coverage you really need for where you are planning on going.

Regards,

Craig

 

[Fern Modena]

I think I'd check what sort of a penalty they have for being underinsured. It may be that if you are, say, 40% underinsured, that they will only pay 60% of *any* claim (including the fixed, scheduled amounts), because you chose to coinsure yourself for 40%. That is how some insurances work, not how you think they do.

Fern

 

[Sandy VDH]

Some policies may also be invalidated because of the under declaration. I would make sure you investigate before you actually purchase a policy.

 

[dioxide45]

Here are some additional details I found when researching this more:

Insure The Full Cost of Your Trip
If you insure an amount less than 100% of the cost of all Travel Arrangements
that are subject to cancellation penalties or restrictions: 1) the maximum
benefit for Trip Cancellation will be limited to the amount of coverage you
purchased; and 2) the maximum benefit for Trip Interruption will be 150% of
amount of coverage you purchased.

Without actually purchasing and using the free look period, there isn't a sure way to determine any other drawbacks.

 

[elaine]

if you are getting a waiver for pre-existing or canx for any reason, the full amount has to be insured.

 

[dioxide45]

Interesting post - thanks for making me think.

I see you are effectively inserting a deductible into the insurance (being the difference in the actual cost versus covered cost). I think this is a great idea, as I do increase my deductible on car insurance to save money.

In terms of impact, would there be a bit of difference in terms of the trip interruption depending on where you are going??? Some locations may be much more difficult to get out of than others (and therefore costly), I think but am not sure. Like if you had to evacuate because of a hurricane, it would be much different if you were in Florida versus say the Dominican. I don't think that is the best example, but there could be examples where you might want to ensure you have the coverage based on where you are going. I like your idea, as you can get the coverage you really need for where you are planning on going.

Regards,

Craig

I didn't really think of it as inserting a deducible, but you are right. That terminology didn't cross my mind. But like car and home insurance, it does bring the costs down.

It seems that the premium goes up exponentially compared to coverage. If I insure $4000 total for the trip ($2000pp) and instead go to $4250, it increases the cost of the insurance by almost $70. $70 for $250 more in insurance?

I agree that some places are more expensive to evacuate in the event of trip interruption. But that coverage actually never changes regardless of the amount of coverage. They have their base coverage at each level (Basic, Classic, and Classic Plus). So what is actually covered outside of trip cancellation and interruption is the same with each plan no matter how high you go on coverage.

 

[dioxide45]

if you are getting a waiver for pre-existing or canx for any reason, the full amount has to be insured.

That would make sense. Though I am outside the 21 days from initial payment. So no pre-existing condition waiver would apply.

I think I will give it a try and see if there are any exclusions in the event of under insurance. Our main concerns are with travel delay, medical and medivac. All of these items are capped at levels with no relation to the amount of coverage purchased. Only increases based on the plan purchases.

 

[Sandy VDH]

Pre existing coverage usually require payment within 14 days of initial deposit NOT 21 days.

Several companies that if you buy insurance and cancel without any penalty, you can often request to have your insurance reapplied to another trip, usually within a specific timeframe (like within 1 year). So for those who don't want to buy insurance if they are not sure they are going but need pre-existing coverage, this is an option, but ask your insurance provider first if they will do this.

 

[dioxide45]

Pre existing coverage usually require payment within 14 days of initial deposit NOT 21 days.

Several companies that if you buy insurance and cancel without any penalty, you can often request to have your insurance reapplied to another trip, usually within a specific timeframe (like within 1 year). So for those who don't want to buy insurance if they are not sure they are going but need pre-existing coverage, this is an option, but ask your insurance provider first if they will do this.

That is good to know. I am specifically looking at TravelSafe, which does appear to have a 21 day pr-existing condition allowance. The one thing I like about TravelSafe is that their medical is primary, vs. many others that are secondary.

 

[johnrsrq]

That is good to know. I am specifically looking at TravelSafe, which does appear to have a 21 day pr-existing condition allowance. The one thing I like about TravelSafe is that their medical is primary, vs. many others that are secondary.

Let us know your final decision as I think your wise in these decisions. I think you mentioned you a platinum II member, even though the medical expense is $0, the Global Emergency Travel Insurance Services for just $39/yr might be worth it to duplicate evacuation and other benefits. Check it out.

here's a link ( still can't do that shortened link thing- tried hitting the chain link but the whole link displays and I don't dare erase part of it.) http://www.g-ets.com/EssentialsServices.aspx

Good luck.

 

[pacodemountainside]

I think the points raised on being voided or being co-insurer bear investigating.

All of the polices I purchased did have a no penalty look/see period. Read and call if not sure. Worst case you just increase coverage.

My initial reaction is would just collect $1,500, but policy language prevails.

Being practical, with drinks on ship being around $10 just skip a couple.

Also, if Medicare is involved I don't think they will ignore any other payment.

 

[dioxide45]

I did buy the policy and can't find anything in the policy that restricts an under insurance situation. Other than that trip cancellation and interruption will only be reimbursed to the covered limits. I posted a quote of this earlier.

I thinking more about this, while it is adding a deducible in to the policy, it is more of a back end deductible. I opted for coverage of $3000 on a trip that has total costs of about $4250. However, depending on how far in advance I would have to cancel, the loss may only be $800 (airfare), so in that case no "deducible" applies. If I had to cancel the day before the trip, then I would perhaps be out the $1250.

If a travel insurance company added deductible options to their plans, they would be "front loaded" in that they would subtract that deductible from any claim that they pay.

 

[isisdave]

I have seen at least one policy that stated the full amount had to be insured. I didn't read what would happen if it wasn't.

If you had multiple expenses that totaled more than you bought, I don't see how the insurer would know that. But if you have one single expense that's more, of course they would when you ask to be reimbursed.

Never having collected on trip insurance, I'd be tempted to do this in the situation you face, even if buying full coverage is required, if I could stand to lose $3000. If it were much more, I probably would look for another policy.

Can one buy policies from two insurers?

 

[traveldaddy]

I believe you can also go with a term insurance. Did this for the family this year as it was almost the same as single trip. Coverage for one year term, up to a limit per person per trip. If you think you might travel more than once it is worth it.

 

[Sandy VDH]

Can one buy policies from two insurers?

I suppose, but if you find your limits have changed you can call back to the original insurer and just up the coverage and buy insurance the gap/difference?

Again, I have seen wording that says you MUST have the entire amount covered, or the policy is voided. Call the insurer to double check. Ask for the section reference in the policy.

 

[dioxide45]

I read though the entire package of information today that I got from TravelSafe. There is nothing mentioning that you can't under-insure your trip. There is in fact a statement indicating "If there is no Trip cost insured, the Trip Interruption Benefit will be limited to a maximum amount of $1,000." So that leads me to believe that I can enter $0 for the insured amounts for each person if I so desire. When I tested this, I got a premium about $35 less than the premium I am paying on $3000 of coverage. So insuring less than the full amount of the trip is permissible, at least with TravelSafe. Though if you have to cancel, you can't make a claim. Though if you hae an interruption and you have to return home early or arrive late, you can file a claim up to $1000.

 

[johnrsrq]

I read though the entire package of information today that I got from TravelSafe. There is nothing mentioning that you can't under-insure your trip. There is in fact a statement indicating "If there is no Trip cost insured, the Trip Interruption Benefit will be limited to a maximum amount of $1,000." So that leads me to believe that I can enter $0 for the insured amounts for each person if I so desire. When I tested this, I got a premium about $35 less than the premium I am paying on $3000 of coverage. So insuring less than the full amount of the trip is permissible, at least with TravelSafe. Though if you have to cancel, you can't make a claim. Though if you hae an interruption and you have to return home early or arrive late, you can file a claim up to $1000.

Is there a free look period on that contract? Travelguard told me that after 14 days from when I purchased a small policy, it was no longer cancellable or refundable in that coverage due to health conditions started. Thus, I had to keep it.

 

[dioxide45]

Is there a free look period on that contract? Travelguard told me that after 14 days from when I purchased a small policy, it was no longer cancellable or refundable in that coverage due to health conditions started. Thus, I had to keep it.

The free look period on the TravelSafe policy appears to be 10 days. Though it seems that they will keep the $4 pp processing fee if you cancel within that period.

 

[isisdave]

I've often bought insurance without any trip-cancellation or -interruption coverage just for the medical/evacuation coverage, so I know Travelex at least permits this. But that really doesn't address the original question.